Selling Your Property
Whether you are selling to upgrade, expand, move location, release funds or due to a change in circumstances, you will want to get the best possible price for your property. It is therefore important to do your homework and familiarize yourself with all aspects of the selling process.
Be well informed about the location sales history, current market climate, legal requirements, potential buyers, extra costs and so on. All these things may sound a bit daunting at first, but Tarago Real Estate will be able to guide you through the process and there are now also plenty of resources available to help make selling your home a successful experience. This short guide will take you through the basic steps of successfully selling your home to set you on the right path.
Market Conditions
Ideally you want to sell high and buy low, but unless you are an investor, this is not always practical. However it does help to be aware of the economy because changes within local and national markets can affect property prices and the cost of living in general. For example, when the economy is doing well and interest rates are low, demand for property is generally high and this in turn pushes prices up. By the same token, when inflation is low, investors may be more attracted to the stock market which could also lower the demand in the property market. Industry successes and failures can also have a knock-on effect - the closure of a factory could mean the loss of jobs and hence a dive in house prices in a particular region.
Seasonal demand
Traditionally, spring is supposed to be the best time of year to sell and the winter the worst, but many other factors come into it. For example if you live in an area which attracts tourists in the summer and therefore potential investors, the best time of year to put your house on the market may be in the summer. Conversely, if in winter fewer houses are on the market in a location that is in demand, the prices may be higher than in another season when a larger number of houses are up for sale. This is where a good real estate agent who is familiar with your locality can be invaluable.
Private Treaty or Auction?
What are your priorities in the sale?
Before deciding on the best way of selling your home, there are several things to consider. Is the housing market rising or declining? What have similar homes in your area sold for? Is there a set time in which you need to complete the sale? At what price are you prepared to sell? How much will it cost you to move? Try and be clear on your answers to these questions as they should help eliminate some of the options and make some of the other decisions along the way a bit easier as well. Keep in mind too that the amount of work you expect your agent to do on your behalf is largely determined by the type of agency agreement you and the agent agree on. There are pros and cons for each type of agreement so bear in mind the factors that are important to you before deciding the best way forward.
Private Treaty
Private treaty is the term used for the sale of property by any method other than by auction. There are many methods of private treaty and many advantages. If you have chosen a good agent who can skillfully negotiate, there is a much better chance of receiving a higher price than if you were to sell at auction. You are more in control of the sale because if you do not get the price you know your house is worth (and you will if you have opted to get an independent valuation) you will not feel forced into selling (as you may in an auction because of the expense you may already owe in advertising and auctioneer fees).
Exclusive Agency Agreement
Having had a recommendation or good impression from the agent during the listing interviews and been impressed by the agency's reputation you may decide give exclusive rights to one agent to sell your property. This type of agreement gives your agent the greatest incentive to work actively to sell your house as he or she will be entitled to a commission if the property is sold during the 'exclusive' term of the agreement.
Sole Listing
This is like an exclusive agency agreement however it also allows you to find a buyer privately. If you find a buyer who has not been introduced by your agent, then no commission is payable.
General Listing/Open Agency Agreement
This allows you to list your property with a number of agents and you only pay a commission to the agency who finds the buyer. If the property market in your area is experiencing a 'seller's market' (where the number of buyers is greater than the number of properties for sale) perhaps this may be a good option.
Multiple Listing
This is where a group of agents have agreed to combine their listings so that each agent in the group receives a copy of your listing. You still effectively enter into an exclusive or sole agency agreement for a period of time with the listing agent, however from their point of view, they will have to share some of the commission with the other agents in the group so may not put as much work into promoting the property as they would in an exclusive or sole agency agreement.
Auction
Selling by auction is another form of an exclusive agency agreement. Auction sales can be attractive because there is a definite period in which you know your house will be sold or at least put you in a position to negotiate the sale with the highest bidder if the reserve is not reached. If time is not on your side, there is the added benefit of the buyer signing a contract on the day of the sale which then frees you to plan your move and gives your stronger bargaining power to buy elsewhere because your funds are not still tied up in your property. A quick sale may avoid weeks or months of having to keep the house in 'show time' condition in case your agent wants to show it to a viewer. Finally, you have the possibility of receiving a price higher than your reserve while also enjoying the security of knowing you do not have to sell below the reserve you have set.
Auctions can be risky
There is also a down side to selling by auction which is not so readily promoted. Where in most market place negotiations you start at a high price and come down, an auction starts low and goes up. So chances are you are not going to get the highest possible price that the buyer would have been prepared to pay. Research has also shown that it is not the great majority of buyers' preferred method of buying. In spite of heavy advertising campaigns, auctions do not necessarily attract more interest than sale by private treaty and their success is dependant on who turned up on a given day (that may not have suited a potential highest bidder).
In addition, if the reserve price is not met, the property is passed in and you will still have to pay for marketing expenses and the costs of the auctioneer - and with these costs going into several thousands, you may feel pressured to lower your reserve and sell anyway.
Which method is best?
With so much to think about it is hard to know what method of sale is going to be most suitable for you. If you are thinking about selling by auction, check the local paper for clearance rates in your area to see the number of houses sold against the number of houses passed in. Go to a few auctions as well to get a feel for how it all works.
Word of Advice
Keep in mind that you want the best agent, not the cheapest. A good agent who charges a higher commission may get you a much better price on your house than a cheaper agent who may not have the same level of negotiation skills and possibly sell your house for less than the buyer's highest price.
